BIR orders massive tax-compliance audit

Regional examiners to target 30% of taxpayers

By Michelle Remo
Last updated 05:12am (Mla time) 07/26/2007

The Bureau of Internal Revenue (BIR) has ordered its examiners to conduct a massive tax-compliance audit nationwide in an attempt to recover from the revenue collection shortfall in the first half of the year.


BIR officer-in-charge Lilian Hefti issued a memorandum to revenue district officers all over the country to audit at least 30 percent of taxpayers registered in their offices before the year ends.


Revenue Memorandum Order No. 12-2007 came after the BIR was told to implement measures that will shore up revenue collection and enable it to meet its full-year target despite the slippage in the first six months.


The BIR, the biggest revenue contributor among government agencies, fell short of its P373.3-billion target for the first half of the year by P38.6 billion.


The BIR’s underperformance has been blamed for the government’s breaching of the budget deficit ceiling of P31.3 billion officially set for the January-June period. The deficit reached P41 billion.


The BIR was originally tasked to collect P765 billion in taxes this year, but the target was later reduced to P740 billion to help ensure the government keeps its deficit for the entire year at or below the ceiling of P63 billion.


BIR Deputy Commissioner Nelson Aspe told reporters that prior to the issuance of RMO No. 12-2007, revenue district offices (RDOs) were not pressured to audit as much taxpayers in a given period partly because of limited manpower.


But Aspe said Hefti decided to impose the 30-percent target for the RDOs to shore up revenue collection.


Aspe said there were about 10,000 to 15,000 registered taxpayers per RDO.


Examiners were asked to prioritize in their audit businesses suspected of falling short of their supposed tax remittances in the past years as seen in the BIR’s “benchmarking” method.


Under the benchmarking method that was implemented last year, the BIR sets a per-industry benchmark on the percentage share of taxes—such as value-added tax and income tax—to the gross income. Taxpayers that fall below the benchmarks are subjected to audit, and those found to have remitted taxes less than their obligation are asked to rectify their remittance.


One audit strategy used by the BIR is the Reconciliation of Listings for Enforcement (Relief) wherein the agency uses third-party information on the purchases made by clients to check if the sales declarations made by a corporate taxpayer were accurate.


Earlier, the BIR also ordered its personnel to check on the remittance of taxes withheld by the country’s top 10,000 corporations from their suppliers. The National Internal Revenue Code requires large companies to withhold part of the income and value-added tax liabilities of their suppliers arising from the sale of the latter to the former.

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